Scottish Gov’t injects another $6.45M to decommissioning fund

An additional £5 million ($6.45M) has been made available by the Scottish Government to the country’s supply chain to help maximize the economic benefit to Scotland from decommissioning of North Sea infrastructure.

Decommissioning of the Buchan Alpha taking place at Dales Voe in Shetland; Photo by: John Coutts; Source: HIE

The Minister for Energy, Connectivity, and the Islands, Paul Wheelhouse, announced on Thursday that the Decommissioning Challenge Fund (DCF) would reopen for the third round of funding. The announcement was made during his visit to the new CEOs of Decom North Sea and Aberdeen Harbour, John Warrender and Michelle Handforth.

Following grant awards of £4.8 million in 2017, the third round of DCF funding will continue to support infrastructure upgrades at Scotland’s ports, innovation in retrieval and transport approaches as well as supply chain projects that will strengthen Scotland’s decommissioning capability and capacity.

The DCF can also support engineering scoping work, feasibility studies, and business development at key sites to help to attract further private investment.

Wheelhouse said: “This round of the DCF includes both capital and resource funding, and it widens the scope of potential projects given that support is also now available for business development.

“We fully recognize that decommissioning is an emerging, but growing, activity in the North Sea. More than £17 billion is expected to be spent on decommissioning activity in the North Sea in the period up to 2025, with the peak for decommissioning activity in this area predicted to go beyond this.

“Scotland’s supply chain is winning the lion’s share of project value in areas like well-plugging and abandonment, but there is room to further increase market share in areas such as the salvage and disposal of top-side infrastructure.

“The budget for the DCF in 2018-19 will reflect the projects coming forward, and our ambition is to match the £5 million successfully awarded last year, however, there is flexibility for this to increase if demand is demonstrated.”

Highlands and Islands

Following the announcement by the Scottish Government, the Highlands and Islands Enterprise (HIE) said it was considering applying to the DCF.

“Energy sector supply chain companies across the Highlands and Islands are being encouraged by HIE to consider applying to the DCF,” the development agency said.

These included more than £800,000 for infrastructure upgrades at Kishorn Dry Dock in Wester Ross, more than £90,000 for work in the Lyness Oil and Gas decommissioning base in Orkney, and almost £60,000 was invested in feasibility studies commissioned by Stornoway Port Authority for the proposed decommissioning facility at Arnish on Lewis.

Other projects include £118,000 for upgrading the plant and machinery by EMN Plant, and Lerwick Engineering and Fabrication received more than £80,000 for the purchase of equipment to enhance capabilities within the decom market in Shetland.

Gavin MacKay, HIE’s head of energy industries, said: “The decommissioning of North Sea infrastructure is already presenting opportunities for the Highlands and Islands. The obvious example is the Buchan Alpha decommissioning, which is being carried out at Dales Voe in Shetland, following major upgrading of the quayside.”

Alongside the Decommissioning Action Plan, launched by HIE and Scottish Enterprise at the end of 2016, the DCF will help Scotland’s oil and gas sector make the most of decommissioning opportunities at home and abroad.